Slashdot Mirror
Expose on Insider Loans
Ctimes2 writes "Everyone's been grousing a lot lately about high priced CEO's and compensation packages, in no small part due to the 'Enron incident'. Business2.0 has a lengthy but enjoyable feature about how corporate loans became 'compensation packages', forgivable, sometimes tax free the and norm for corporations. And Slashdot's favorite whipping boy Microsoft, while not leading the pack, certainly isn't the poster child for trustworthy finance. More importantly (or rather, to our eternal annoyance), the article provides some much needed information trolls can add to their 'CEO's are bad!' rants: "Insider lending added thrust to the long surge in executive pay that has pushed the average major-company CEO's compensation from 45 times that of the average worker in the early 1970s to about 500 times worker pay today.""
These are the people who write the laws of the country. How about the big politcal machine behind those red light cameras? Country is turning into a cesspool of organized crime.
Now, this is a serious question...exactly what does the CEO do? What is he responsible for that makes him worth so much money to these companies?
How good do you have to be at making decisions to be worth millions?
Twenties Retirement
Seriously, what exactly does the CEO do anyway that makes him worth so much?
I'll bite.
I'm one. Of a considerably smaller ship, but one nontheless (I provide broadband to about eight counties in a "fly over country" state and run a regional network for voice, IP and private line).
I created my company. Worked my ass off for several years living in a crappy part of town in a small house. Leveraged everything. Risked everything. Signed on the line for every loan, pledged my house, farm and income for years to come to make it happen. Worked for 12 months with no fscking paycheck (actually, you get to pay to play in this club... attorneys, accountants, routers, systems, offices all cost bucks. Guess where it comes from?)
While my geek friends were sneaking out at 4:30 on Friday to go drink and hit the hockey games, I was working till midnight and both weekend days. Vacation? 1998 was the last time I saw free time. Fund the company? Build routers? Climb towers? Carry out the trash? Whatever it took.
Meanwhile, my competition (incumbant/monopoly phone companies in small towns) was run by Junior (second or third generation or more of family-run operations). While Junior made a cushy income, drove his flashy car, golfed at the country club and enjoyed that nice $5 million company home in Vail, I froze my ass off on grain elevators and windmills at 4AM, making small town customers happy.
So now I'm taking Junior's business. Bringing broadband to his town. Making the people happy. Junior's been horrified, learning that my annoying, trivial little company is now taking his core business. He's yesterday. Obsolete. To Junior, I'm a barbarian, but to the community I'm a saint. Even Junior's senator hangs around my office for photo ops.
So why shouldn't I be paid for what I did? You want progress? Don't expect it from Junior. If you want it from me, it comes on my terms. If I get greedy (like the dot-com assholes who lost were in it only for the $10 million homes - learn about these losers and you'll see they're nothing but upper class daddy's boys anyways. They didn't earn it), then I'll join Junior and let some efficient young fsck replace me.
So, do you really want to eliminate my incentive? Sure hope you like Junior...
*scoove*
shoot man, when else will we find companies like InternetCash.com ???
These bozos ran around giving out samples of their "product" at awards shows for media outlets I've never heard of and lavish galas like their New Years y2k party. That one they rented an entire hotel on south beach, and got Perry Farrell and Mixmaster Mic to come and play. And play we did :) Free booze, grub, women, and . . . Their f%^& product was cash! They were just running around giving it away!
oh well, back to my personal austerity program
gs
"You never want a serious crisis to go to waste." - Rahm Emanuel
If only...
Why is Triangle Man so MEAN?
That's certainly a valid answer. You started with nothing and built up a great business, and you're entitled to whatever you can get out of it.
What I meant was, these companies that hire someone to come in and run the place - not create it, not stay up til 3 in the morning to keep it running, just make the decisions and collect stock options, like Junior - what do they do?
I'd be happy to hear that they're worth every penny of the money; I'm honestly curious.
BTW, somebody mod the parent +1 interesting..
Twenties Retirement
SEC's budget last year: $438 million
Budget under new law: $776 million
Budget after Bush cut: $568 million
So my question is, what does the SEC need so much money for?
$30 million / 100 new employees = $300,000 per new employee.
$438 million / 3,100 employees = $141,000 per employee.
$102 million / 3,100 employees = $33,000 raise per employee
$108 million / 3,100 employees = $35,000 per employee for computers and 'financing' to restore the agency after losing its New York offices.
Where is all of the SEC's money going?
It's not reported nearly enough that Bush Jr. (Jar Jar Bush) got his breaks through insider loans. The second article is worth reading through.
t m
http://www.american-reporter.com/1954/112.html
Another important provision included in the bill makes it illegal for corporate executives to receive loans from the company coffers. The President has acknowledged he received a loan from Harken in the late 1980s.
http://www.commondreams.org/headlines02/0712-06.h
In recent days, questions have resurfaced about the way Bush sold $848,000 worth of shares in Harken Energy Corp. just before the stock price slumped, and about Bush's delay in filing the required insider-trading report. The Harken deal helped Bush pay off the loan on his $606,000 investment in the Texas Rangers baseball team, for which he walked away with $14.9 million. In his defense, Bush has repeatedly noted that the Securities and Exchange Commission investigated possible insider trading but took no action against him. The investigation occurred during his father's administration. Bush's critics have sometimes joked - as they did of his father - that he was ''born on third base and thought he hit a triple.'' In fact, the full context of Bush's business dealings provides a somewhat different metaphor: This is the story of a man who struck out numerous times before being bailed out by big hitters who often were family members, friends, or supporters of his father.
__ Someday, but not this morning, I'll finally learn to use the preview button.
This message is for you: The Noble Person sitting behind a terminal at a major corporation, who at the press of a button, could cause widespread panic among government, capitalist and media power-centers.
A lawyer must pass board exams to practice law.
A doctor must pass board exams to practice medicine.
Many elected and appointed officials in government are required to take an oath.
Capitalists are not required to make any oath or affirmation prior to taking control of, in some instances, more wealth and industrial/financial power than exists in dozens of countries combined.
There are Noble people and their numbers are growing. The Noble people are fed up with the power mongers, the wealth mongers, and the media power centers which market their ideas to us.
The truth is plain to see. They want control of absolutely everything in the world: the environment, the banks, the government, the military-industrial complex, the future of you and your children's children.
Their actions are plain to see. They do what they please until someone finds out about what they have done.
The Noble peoples of the World see things differently. The Noble people are the ones whose labor contributes to the media and government power centers to surely influence our every thought and action.
The era of greed and selfishness will be easily dealt with by the BILLIONS of NOBLE PEOPLES who wish to live on this EARTH which sustains all of HUMANITY. The Earth is not the property of Capitalists. BILLIONS of NOBLE PEOPLES around this planet want to live in HARMONY with the Earth and as history shows time after time - they will eventually revolt against those that wish to enslave others for their own profits.
A wave of resistance is gathering strength now. You hear it in the streets. You hear it in the workplace. You hear it everywhere - except where the media power centers have control.
Why do governments and capitalists want so much to have complete control of the INTERNET? "to have control of you"
What do governments and capitalists give as reward for those who do their dirty work? "money"
This message is for you: The Noble Person sitting behind a terminal at a major corporation, who at the press of a button, could cause widespread panic among government, capitalist and media power-centers.
Inform Yourself and Take Action. Be Aware Of Agents.
When was the last time your *REALLY* sat down to read the US Constitution?
It might be of interest to note that, during the 1970's, the average pay of the worker rose faster than that of the CEOs. The gap between the two has been growing apart at an exponential rate starting in the 1980's. At least, that's what they tell me in my Senior Seminar class.
So, do you really want to eliminate my incentive? Sure hope you like Junior...
No one is arguing that a CEO shouldn't make MORE money than other workers at a company. The question is why they are being given absurdly high compensation packages compared to every other country in the world.
It's insiderism, it's a sleazy money grab; they know it's wrong, why else would boards of directors try to hide these compensation packages from their shareholders? See the Jack Welch of GE's compensation scandal for only the latest such example.
You worked your ass off. You took risks, you got rewarded. But you can bet Jack Welch didn't climb any poles or take out the trash. Unless the trash was in Tahiti and he took the company jet. Most CEOs of large companies get a big payday whether or not their companies do well. Tying compensation to stock prices was supposed to fix that; instead they figured out how to fix their own stock prices until they could cash out.
Right ON!
Anyone who thinks CEOs or "management" don't do any real work, is an idiot.
I've gotten tired of trying to explain to these people-- and have been forced to conclude that they aren't listening. They've made up their minds.
They have no vision and no desire to take any risks. They will sit in their little job and whine-- cause its a lot easier to whine than to, excuse me, bet the farm, as you did.
Basically, they want something for nothing. I have more contempt for them-- the unambitious who want to prevent those with ability from profiting on it, than I do for the guy you call Junior. Junior was given the silver spoon and didn't recognize the value of it, I can understand that. You know he's recognizing it now.
But those who think themselves "poor" or just scraping by (with the "help" of %18 credit card debt and a huge house they shouldn't have bought and a care that isn't 15 years old) -- those people should know the value of money, cause they've managed to run out of it.
And if they make the life choice to have lots of kids and spend spend spend, then they have chosen to be poor. I'll be friends, but I don't give any sympathy when they are jealous of my wealth.
I have one very close friend who's clearly jealous and I try and try to explain about credit cards and the stock market and all that, but thir eyes just glaze over. The credit card, and the shopping it represents, is their own personal form of crack.
One day, they will wake up from the high and find themselves hung over. Hopefully its not too late for them when they do.
But bitching about loans some company gives to its employees is just an excuse to ignore the %21 reality hanging over their heads.
To quote spike lee:
Wake Up!
Yeah, and you guys panned the ipod too: http://apple.slashdot.org/article.pl?sid=01/10/23
You may be worth then what, 10x your average, or 'most valued' employee, but not 500x times 5 years after you made your first million.
Simply working an extra say, 12000 hours, doesnt entitle you to leech of everyone else.
You might live like shit for 3 years and give stuff up, but the average joe has to live in a shit house for 60 years, loose his life savings in 401k deaths, and keep working making the CEOs richer and fatter.
Ill be happy for CEOs to get 500x saleries as long as they still paid an equal % tax rates as joe bloe, not have 90% of it refunded due to negative geering, 'fake losses', and 12 tier deep family trust funds.
SO earn well dude, but dont earn beyond a shiek of aly baba.
Final word: DO CEOs deserve to have 1 billion $ in real cash? while the workers still get piddlie 'just above average earnings' to not leave.
Liberty freedom are no1, not dicks in suits.
I wonder what would be the effect of making all shareholders in a publicly traded company proportionally liable for actions done with their money even if they do not serve as an officer or director of the company. "I didn't know" or "I wasn't involved" will no longer be an excuse.
This will make all investments more expensive by the liability insurance premium. In order to ensure that new inventments will not be stifled investors could be given a tax break on the returns of their insured investments.
When I give my money to someone in return for a percentage of the venture I expect them to take certain calculated risks and I know that I may not get my money back. I am free to take this risk. What cannot be ignored, though, is that by encouraging someone to take risks I put not only my own money at risk. Thousands of lives may be affected by these risks. Why should I be able to walk away from a failure and just write it off as a lost investment?
Stop worrying about the risks of nuclear power and start worrying about the risks of not using nuclear power.
You know, I might enjoy SlashDot a little more if the stories and posts concentrated more on general tech news and less on following up on every possibly questionable act that Microsoft does. I mean, yeah, it plays a major role in the industry, but it isn't the only player. And yeah, it was found guilty of abuse of monopoly power, but that doesn't automatically make every attempt by Microsoft to compete illegal -- just the specific ones outlined by the court. (And as far as that goes, please recognize that "abuse of monopoly power" is translated as "whatever the judge and the political powers of the day consider as bad behavior on the part of a business," which is by definition somewhat unknown -- there was no law against Microsoft's practices until the judge decided that they were unfair.)
In this case, a bunch of companies were taking advantage of loopholes. Some did so for reasonable purposes -- for example, attracting a talented executive when other methods would have cost the company more. Other companies did it for less productive reasons -- there is a lot of cash flowing by, so let's each grab a handful, and since this has to go on the books somewhere, we'll use the loophole of the week -- corporate loans. Or maybe all of the loans were some mixture of the two. Whatever -- it isn't important to the argument.
What is important is that it wasn't necessarily ethical, but it wasn't necessarily all vice and corruption, and it wasn't necessarily illegal. In this case, it seems that when Microsoft saw that other companies were getting in trouble for something that it had been doing as well, it came forward and put its cards on the table.
Another thing to consider is similar to a point I saw in some earlier posts (that Microsoft was making money, but Enron wasn't). That almost covers it, but I would prefer to say that "Microsoft could afford it, but Enron couldn't." Enron executives were taking cash even when they knew that the company was just scraping by, or worse, about to take a tumble. Microsoft made the loans when they knew that the company could afford to take the hit if necessary.
I guess what I'm trying to say is that with Microsoft at position -- what was it, 18 or 28 or something -- on the chart of companies with loans to executives, having given out $30 million in loans and not really causing a problem for its stockholders, I don't really see why the SlashDot community or the author of the article needs to single out Microsoft.
For what it's worth (probably not much)...
Time flies like an arrow. Fruit flies like a banana.
If the execs were really worth their salt, I'd have less against them hoarding the pile. I have every respect for someone who built the company by skimping, hard work, smarts, and guts. I can also respect those traits in someone who didn't build the company, entering later. But much of the time I just see silver-spooners who want the good life, and demonstrate no great leadership, capability, or insight.
From another perspective...
Business runs on the commons, and I don't mean to invoke "communism, there". Business runs on an "economy", and the strongest economies have a strong middle class. Yet it seems that tied in with the executive compensation 'thing' is the desire to cut 'costs'. ie - pay as little as possible for workers. Taken to its extreme, it amounts to dismantling the middle class, which appears to be what's happening, today. Without a strong middle class, how can there be a strong (Or perhaps any, doesn't War actually improve the economy by expanding the middle class, when you really think about it?) recovery?
Knowingly taking part in dismantling the middle class amounts to foolishness, IMHO. Foolishness is forgivable in someone with my salary, but for someone making over 100 times as much, it's not. If they're drawing down 100 times as much as me, they'd better be at LEAST 10 times wiser.
Evaluating an exec's actions in executing a layoff, this may me microscopically smart, but it's sure macroscopically stupid. I see where Sun is going to lay off 11% of their workforce. If they're like my employer, the fat has been gone, and they've already cut meat at least once. The layoff makes the quarterly financials look better, but in the long term hurts the company. Assuming a recovery comes, their development plans have been hurt, they've paid 'bronze parachutes' to the laid off, and it's going to cost more to hire and train new workers later to get back on track.
I wonder what would happen if Sun tried an 11% across-the-board pay cut. I know the cost of an employee is roughly double the salary, but if across-the-board included executive compensation, and if no bronze parachutes were awarded, I suspect the savings would be the same. Would the top talent leave? Maybe, maybe not, depends on an old concept called "loyalty". I'd be less inclined to leave if I knew the sacrifice were shared by ALL, if it kept my team together, and if it were temporary. It's hard watching co-workers who are friends lose their jobs in a depressed economy.
Bonus question: Did the Rigas family build Adelphia from scratch? ie: Did they pilfer their own creation, or had they stepped in, later? Don't know, curious. This post comes from an Adelphia connection.
The living have better things to do than to continue hating the dead.
why they are being given absurdly high compensation packages compared to every other country in the world.
In much of the rest of the world, bribes, rewarding cronies / friends of the king/dictator, etc. is the way of things. Wealth is even more centralized in these societies and unlike the US system, middle to lower class persons have little chance of any upward mobility.
So you may be right - CEO's in third world nations don't do as well. But the leader's buddies do even better (look at the Saudi family, for example).
It's insiderism, it's a sleazy money grab
But is this unique to corporate America? I'd argue that sleazy money grabbing people exist everywhere, as does relativism. It's a mechanism for a lesser person to rule over a greater one, obtaining more resources with less work. Whether it's done with a gun or via a guilt trip (as is more common in our society), it's still parasitism.
they know it's wrong, why else would boards of directors try to hide these compensation packages from their shareholders
Because the company is in attrition/decline phase and the shareholders were in on the game. Seriously, we reelected a worthless, deviant parasite president because "the economy was good." I've seen greed in comm company boardrooms that everyone subscribed to, ignoring that it would kill the company eventually.
But as long as the shareholders got their increasing share price (or dividends), they went along with it.
Understand the only reason people are pissed now is that the market is down, profits are down (or gone), and the wheel isn't getting greased.
Tying compensation to stock prices was supposed to fix that
Let me throw out an alternative - promote a voluntary CEO standard:
- base pay less than $350K/annual
- bonus pay issued in stock grants or options
- inclusion of all benefits (personal use of jet, leased auto, housing stipend, stadium box, etc.) in pay package for base pay rule
- penalties that impact bonus pay for SEC violations, etc.
I'll promise you that at $350K, you're going to have some motivated CEO's in larger companies. Want that two million dollar vacation home? Get working.
Establish the CEO standard and list companies that comply with it. Put a notation next to the ticker symbol denoting complying companies. Sure, you can offer that $3 million base, but prospective investors will know you're not in compliance.
Thoughts?
*scoove*